If you are looking at purchasing your first home, and do not know where to start, cure your confusion today! Here are the 9 steps to purchasing your first home! It can seem daunting process buying your first home as it seems like a heavily involved process, but if you break it down into 9 simple steps, you can move from being a tenant into a proud home owner with minimal fuss!
The first step is to get all of your ducks in a row, ready for your meeting with your mortgage broker. Make a list of all of your assets and your liabilities, taking into account your living expenses, loan repayments and student debts etc. Also ensure your tax returns are up to date.
Spend some time looking at the different loans available, so that you can be ready to ask plenty of questions when you meet your mortgage broker. It might be worth speaking to your current bank to see what they can offer you so that you have a ballpark idea before meeting with a mortgage broker. Remember, there are hundreds of products out there to choose from and the reality is that not every bank has something to suit, so it pays to shop around to find the best deal that suits your personal circumstances.
2. First Meeting
Don’t freak out! Generally, meeting with a mortgage broker can be pretty daunting as you’re laying all of your personal finances out for someone to look over. Don’t worry – there is no judgement and even if you are not quite in a position to be ready to buy a house, you mortgage broker will be able to work with you to set some goals to get closer to buying your first home.
Your mortgage broker will have his/her own way of doing things, but usually will give you a run-down of their panel of different lenders, what fees and commissions they charge, and the information they need from you.
The next step will be a discussion around your financial position, how much you need to borrow and what sort of loan products might be best for you. Your mortgage broker will then collect all of the relevant information needed to complete your application.
Your mortgage broker will review your application and make sure that all of the details are accurate and complete. They will provide some information to the lender about your ability to service the loan (i.e. whether the repayments will be made easily) and then they will submit the application on your behalf.
If all goes well between your mortgage broker and your chosen lender, the next step is Pre-approval, or Conditional Approval. This allows to you start looking for a property, because the lender has advised you that you’re likely to be approved, and the approval amount. There will be some conditions attached, and nothing is guaranteed.
Once you have your pre-approval in place, you can start house-hunting! If you have an offer accepted on the property, your broker will need a copy of the contract to submit to the bank with your application.
Remember, you should always give yourself a buffer. For example, if you are pre-approved for $500,000, it doesn’t mean you should spend up to $500,000. Take into account how mortgage repayments will affect your day to day lives i.e. will you need to cut down on travel or entertainment or will you need to put off having children for a couple of years because you’ll need to drop down to a single income for a period of time.
The lender will investigate the value of the property you choose to make sure the market value is similar to your purchase price and also to ensure that they are happy with the property itself. They will usually physically attend the property to check over the condition and how it compares to other properties in the area. Generally, the valuation is the last stage in the approval processs (being that you meet all of the other criteria).
6. Unconditional Approval
Once you meet all of the conditions that the lender sets out, you will receive unconditional approval, also known as the formal approval letter. The real estate agent that you are purchasing through requires a copy of this letter to confirm that the sale can proceed. They will email this off to both settlement agents so they are aware as well.
7. Letter of Offer
Your letter of offer makes it all official, and it’s important to make sure you understand all of the conditions, fees and details contained within the document. It’s a good idea to ask your solicitor or conveyancer to help at this stage if you’re unsure. (These are the banks loan contracts)
8. Mortgage Documents
The mortgage documents will usually arrive with your letter of offer, and they outline the contract between you - the borrower, the lender and the State Revenue Office. This should be carefully reviewed by your conveyancer. Your mortgage broker will meet with you to go over all the documents and assist with the documents signing.
The settlement date is the big one - when the money actually changes hands, all of the different costs are settled and you can then take possession of the property. This step is generally conducted by a settlement agent.
If everything goes according to plan - this is the part where you pick up the keys, grab a bottle of bubbly and start celebrating. Congratulations - you’re now a property owner!
If you are ready to take the first step to owning your first home, please get in touch with me and I can help you on your way. I can be contacted either on by call or SMS to 0401326641 or if it’s easier, shoot me an email and I’ll get in touch with you – firstname.lastname@example.org. I am a mobile lender and don’t just work 9am – 5pm so I can meet at your home or work, or I can come by of an evening if that suits! I hope to speak with you soon!